Multilateral lending institutions and a United States-based think tank have thrown their support behind the establishment of the country’s own sovereign wealth fund (SWF), the budget chief said on Wednesday.
Department of Budget and Management Secretary Amenah F. Pangandaman said during the previous administration, the International Monetary Fund (IMF) and the Asian Development Bank (ADB) backed the idea of creating a Philippine SWF.
Pangandaman said that it was during the stint of current Finance Secretary Benjamin E. Diokno as Bangko Sentral ng Pilipinas (BSP) governor when the idea of creating an SWF was floated during the Duterte administration.
She added that they formed a technical working group (TWG) during the previous administration to determine the feasibility of establishing an SWF.
“During that time, we really had a surplus in our reserves. The IMF has said we should only have at least three months of our reserves, but during governor Diokno’s time, it was 10 months, sobra-sobra po,” Pangandaman said.
“So we did research, TWG, we even met with ADB, the IMF. Both development partners said it’s okay, pero hindi po sa [BSP] kasi wala po sa mandate ng central bank,” she added.
Pangandaman said she supports the creation of the country’s wealth fund since it would generate additional budget for the government amid “limited” fiscal space.
“Any measure, program, law that will help our budget, given our limited space right now, is welcome news for me, and at least for the DBM po. We will support the creation of the wealth fund,” she said.
The budget chief said that the national government has tapped the Milken Institute of Singapore to determine the feasibility of creating a Philippine SWF, particularly the specific type of such fund suitable for the country.
Based on the findings of the forthcoming report of the think tank, Pangandaman said the right time to create the country’s SWF is “now.”
“Just this morning, part of our TWG is a meeting with the Milken Institute of Singapore. They will release a report soon. And I think the report will say that the time is now,” she said.
“We also tapped them to help us when we were working on the type of sovereign wealth fund, because there are several types—some are using it for their pension system, others are using it for their natural resources. Ours is for development, to develop and to fund at least our infrastructure projects and programs,” she added.
Pangandaman also disclosed that Finance Secretary Benjamin E. Diokno met with the World Bank last week to discuss the proposed Maharlika Wealth Fund (MWF) of the country.
Despite growing opposition to it, the economic managers of the Marcos Jr. administration last week urged Congress to fast-track the passage of MWF, which they claimed would lead to a more “prosperous” Philippines. (Related story: businessmirror.com.ph/2022/12/09/diokno-on-maharlika-wealth-fund-dont-deprive-people-of-chance-at-prosperity)